Will my allowance seen as an income to get a home loan?

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pAppON
Posts: 9
Joined: Tue Mar 20, 2018 9:26 pm

Will my allowance seen as an income to get a home loan?

Postby pAppON » Fri Jun 08, 2018 12:36 pm

Hi team,
I work in a department store in Sydney. Every month I work in shifts every day and I receive penalty rates whenever I have to work on the weekends or do a night shift in addition to my base salary.

I am thinking of buying a house and I need to borrow around $450,000 to complete the purchase. Can you tell me if the banks will accept the allowances as my income when they review my loan application?

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Otto Dargan
Mortgage Specialist
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Will my allowance seen as an income to get a home loan?

Postby Otto Dargan » Fri Jun 08, 2018 1:50 pm

Hi pAppON. Welcome to the forums.

Lenders are cautious about the applicants who are applying for a home loan with the support of allowance income. It is because they believe that the shifts the applicant is assigned to may change and in such case, they would no longer be receiving the penalty rates.

Nonetheless, lenders generally want to know how regular your penalty pay is. Therefore, if the payment is irregular, then most banks & lenders will be less inclined to include it as an income when they assess the home loan application.

Luckily, some lenders will use all of your shift allowances, weekend penalty rates and night work penalty rates as long as you can show consistency over time.

If you would like to find out how lenders will assess your income, then you can use our YTD Income Calculator. However, please keep in mind that the result will be an estimate and the actual result may vary.

Nevertheless, lenders may be willing to lend you up to 90% of the property value and possibly 95% if they feel your application is strong. Your credit history, employment and income source will help them to determine this.

Your employment will also be a major factor to determine this. If you are not employed on a full-time basis then lenders will consider as a casual employee and may not consider your shift allowance income.

If you think that your penalty pay is regular enough for you to rely on it to make your mortgage repayments, then please enquire online or call us on 1300 889 743 to talk to one of our mortgage brokers.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

pAppON
Posts: 9
Joined: Tue Mar 20, 2018 9:26 pm

Re: Will my allowance seen as an income to get a home loan?

Postby pAppON » Fri Jun 08, 2018 2:56 pm

Thanks for letting me know. I’ve been permanently employed and been here for the last three years. What documents do I have to provide to the lenders to prove my allowance income?

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Otto Dargan
Mortgage Specialist
Posts: 7021
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Will my allowance seen as an income to get a home loan?

Postby Otto Dargan » Fri Jun 08, 2018 3:58 pm

Hi pAppON,

Most lenders would require:
  • An annualised Year To Date (YTD) figure from your payslips
  • Your group certificate or
  • A letter from your employer.
Although most lenders require two of these documents, we have some lenders that can consider just a letter or just payslips in some situations.

Lenders will calculate your income based on the documents you provide them with. So, it’s prudent to arrange these essential documents for a standard loan application.

If you want to learn more about allowance income home loans, then you can have a look at our website or call us on 1300 889 743 or enquire online.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

pAppON
Posts: 9
Joined: Tue Mar 20, 2018 9:26 pm

Re: Will my allowance seen as an income to get a home loan?

Postby pAppON » Fri Jun 08, 2018 5:19 pm

Thanks for the information, Otto. I’ll arrange the documents and speak with you guys tomorrow. Cheers.


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